Looking ahead, all eyes are on the US economic calendar. The Employment report is expected to show Nonfarm Payrolls (NFP) rose 165,000 in January, compared with a 155,000 increase in the prior month. Meanwhile, the ISM Manufacturing gauge is expected to tick narrowly higher to 50.6 over the same period versus 50.2 in December.

Outcomes in line with expectations would fall closely in line with recent trends, offering little that has not been priced in already and implying limited scope for forex market volatility. US economic releases have increasingly underperformed analysts’ forecasts since late December however (according to data compiled by Citigroup). This seems to suggest market observers’ perceptions are rosier than they ought to be.

If this trend continues and brings disappointments on today’s releases, a breakout of risk aversion across financial markets amid worries about the implications of a slowdown in the world’s largest economy for global recovery at large. Such an outcome may finally offer a respite to the Japanese Yen as haven demand sends capital flows back into the beleaguered currency.

Interestingly, the previously safety-linked US Dollar could find itself on the defensive given such a scenario. Soft economic data – particularly of the labor-market variety – is likely to weigh against the possibility of an earlier end to the Fed’s QE efforts, punishing the greenback. A particularly sharp snap-back in the increasingly overextended USDJPY exchange rate may likewise send ripples of Dollar weakness elsewhere, amplifying pressure on the benchmark unit.

The Euro is outperforming in early European trade – touching a new 14-month high against the Dollar – after January’s German Manufacturing PMI reading was revised higher. The Australian Dollar is under pressure following disappointing Chinese Manufacturing PMI data released overnight. Official figures showed factory-sector growth unexpected slowed to the weakest in three months, threatening the outlook for the Asian giant’s demand for Australian mining exports.